ISLAMABAD, July 1: The federal government on Friday allowed duty- and tax-free import of unlimited quantities of wheat and flour, raw and refined sugar and 250,000 tons of urea fertilizer to augment supplies.
The decisions were taken at a meeting of the Economic Coordination Committee (ECC) of the cabinet. Prime Minister Shaukat Aziz presided over the meeting.
The meeting, however, decided to finalize the quantities of import of refined sugar in due course of time keeping in mind international prices.
Economic Adviser Dr Ashfaq Hassan Khan told Dawn that private sector would be allowed to import wheat and flour without any duty or withholding tax.
He said the decision was taken in view of the rising prices resulting from manipulations by mill-owners.
He said the price of average quality flour in the country hovered around Rs12.96 per kg and of wheat around Rs11.10 per kg.
The Utility Stores Corporation (USC), he said, would sell five million flour bags of 10-kg each per month (50,000 tons) through its 400 outlets and 49 mobile units at Rs11.50 per kg.
The mobile USC units would provide wheat and flour in urban areas especially Turbat and Loralai areas of Balochistan, Northern Areas, Fata and AJK where prices were higher than in other parts of the country. About 15-20 million families would benefit from the facility, he said.
SUGAR: The ECC allowed unlimited imports of raw sugar through private sector without any duty or withholding tax. No time-frame has been fixed.
The meeting decided to import refined sugar through the Trading Corporation of Pakistan (TCP).
The quantities of refined sugar imports would be set by a three-member committee.
The adviser said that sugar would sold by USC outlets and mobile units at Rs23 per kg. The decision, he said, was taken on reports that sugar prices were again increasing for the last few days.
UREA: The ECC decided to allow the TCP to import 250,000 tons of urea without duties and taxes to augment supplies for the next Rabi season.
It would be in addition to 250,000 tons being imported for the ongoing Kharif season. Of this, 120,000 tons have already arrived while the import of remaining quantities would be completed this month.
PADDY CROP: The prime minister rejected a summary seeking intervention price for basmati and Irri-6 crops at Rs560 and Rs260 per maund. He said any such move would reverse the reform process of the past five years. He said such a proposal should not be made in future.
He also rejected a proposal about Passco purchasing basmati and Irri-6.
Mr Aziz said the rice business was purely a private sector subject and the government would not intervene in it. He said the government had fixed the support price only for wheat and introduced intervention price for cotton owing to its bumper crop.
MANGLA DAM RAISING: The ECC approved flotation of Rs8 billion worth of ‘Sukuk’ bonds for Wapda through local banks.
It would include Rs5 billion initial bonds issue and Rs3 billion green-shoe option in case of over-subscription. The proceeds would be used to meet a financing gap of Rs8 billion in the Rs64 billion Mangla Dam raising project.
The CitiBank group has already been selected to arrange the financing at an interest rate of KIBOR plus 35 basis points, payable in five years.
SUKKUR DRY PORT: The meeting approved a proposal to set up the first dry port in Sindh at Sukkur to generate economic activities there as dates’ trading alone was estimated at Rs2 billion per annum. The Pakistan Railways would be the custodian of the dry port.
WAPDA DEBT: The ECC decided to convert Rs21.6 billion worth of Wapda loans payable to the federal government into equity to relieve it of immediate cash shortfalls.
GHAZI BAROTHA COMPENSATION: The ECC approved payment of $98 million to Ghazi Barotha hydropower project contractors as compensation for a force majeure arising out of 9/11 incident and US attacks on Afghanistan. The amount is payable by August 9, 2005 to the contractor.
The contractors had stopped work on the project and claimed $450 million in compensation in addition to $76 million compensation already received by the company about three years ago.
Former Wapda chairman Zulfikar Ali Khan had refused to pay more than $76 million to the contractors in compensation. The contractors had approached the International Commission for Settlement of Investment Disputes (ICSID) for arbitration seeking $450 million compensation.
A three-member committee comprising the attorney-general of Pakistan, chairman of the Securities and Exchange Commission of Pakistan and the incumbent Wapda chairman held negotiations with the contractors and reached an out-of-court agreement to pay $98 million in compensation.
The compensation would be other than $511 million to be paid to the contractors as construction cost and $250 million under process of payment to the engineers of the Ghazi Barotha project.
DEVELOPMENT: The ECC constituted a committee comprising Dr Abdul Hafeez Sheikh, deputy chairman and secretary of the planning commission, Minister of State for Finance Omar Ayub and economic adviser to recommend steps to improve preparation of PC-Is of development projects.
The ECC did not approve proposals relating to transfer of Pakistan Steel Mills’ industrial estate to the National Industrial Parks Management Company and leasing out of two concrete factories of the Pakistan Railways and directed that the proposals needed further home work.
FOREIGN INVESTMENT: The meeting noted with satisfaction that foreign direct investment would cross $1.3 billion mark at the end of June 2005, which was 30 per cent higher than last year.
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